There are two views of this problem and they are contrary to each other: –
This theory was suggested by Hall and Blackstone and gained support of Dr Carten. According to this theory, no new law is created by the judge. The courts do not make the law, but their province is to ascertain and declare what the law is. Judges only discover existing laws, the particular principle, which governs individual cases. By their interpretation, they give a new form to the existing law. Hall sets out the declaratory theory of precedents and maintains that if parliament alone legislates, in the strict sense, judges only expound the law, and their decisions are the best evidence of what the law is. A necessary result of this theory is that the effect of the decision is retrospective because it not only declares what the law is, but what it always has been. Nonetheless, as Maine pointed out, once the judgment has been declared and reported, we start from a new train of thought and frequently admit that the law has been changed.
Lord Esher says there is in fact no such things as judge made law, for the judge do not make the law, though they frequently, have to apply the existing law to particular scenario in which it was not authoritatively declared in any previous law.
Theory of Law Making
The view of another theory is that the judges make or create an entirely new law. Bentham and Austin attacked the traditional view as childish fiction and said that judges are in fact lawmakers and perform a function very similar to that of the lawmaker.
Lord Bacon was of the opinion that the new points decided by the judges are a direct contribution to the development of the law. Professor Dicey also supports this point of view and gives an example of English common law which was made by judges through their judicial decisions.
Prof. Gray supports this law-making theory and says that Judges alone are the makers of law. Discrediting the declaratory theory, he was of the view that comparing the function of the Judge with that of the legislator, would be misleading.
No doubt, Judges are the law-makers but such power is strictly limited rather than unlimited. For instance, a judge cannot reverse a statute where the status clearly lays down the law. Also, the legislative power is not unlimited but restricted to the facts of the case before them.
Sir John William Salmond was a great supporter of this theory that he was evidently stressed as to correct position of a precedent. He was of the opinion that declaratory theory must be totally denied in the law and an equity.
In cases which are not covered by existing law, the judicial decision create new notions and formulate new principles which were never contemplated earlier. For example, in Rylands vs Fletcher, 1868, a new category of strict liability was evolved wherein it was held down that the escape of dangerous thing from a premises was at the peril of the owner of the premises who had kept it. Likewise in India, the Supreme Court overruled the Golaknath decision in Keshavanand Bharti’s case and laid down a new basic structure theory and in Golaknath case, the new principle of prospective over-ruling was evolved by the Judges.